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Friday, February 20, 2009

Republican SEC negligence

The case of Texas billionaire R. Allen Stanford looks like another example of the failure of Republican governance. This is the second massive case of financial fraud that the Republican-run Securities and Exchange Commission either missed or ignored.Why was the SEC so feeble and toothless in its enforcement of security laws. It has been reported that there were numerous "red flags" about Stanford Financial Group, but each time the SEC responded with a small slap-on-the-wrist fine. Was it because of Stanford's political connections? The "pro-business" ideology of the Republican-controlled SEC? Or a combination of both?

Stanford is clearly a flight risk. There were already reports that he tried to get a one-way ticket to Antigua where his offshore business operations are based. So why, when they when the authorities finally tracked him down was he simply "served papers"? As one blog commenter noted, they should have planted a marijuana cigarette on him so that he would at least be guaranteed to do some jail time. Because bilking countless people out of $8 billion apparently isn't a serious enough crime when you are wealthy and white.

On a related note, Phil Gramm's employer UBS has recently agreed to pay a substantial fine to the IRS for its complicity in shielding billions of dollars from U.S. clients from taxing authorities. UBS, the Swiss banking conglomerate, has also promised to hand over the names of several hundred of its U.S. customers who have used it to avoid paying taxes.I anxiously await publication of that list. Two of my biggest pet peeves are wealthy tax cheats, and companies that set up in tax havens like Bermuda to avoid paying taxes.